Wednesday, February 15, 2017

On
February 8, 2017, the U.S. Chamber of Commerce’s Global Intellectual Property
Center (GIPC) released the fifth edition of
the International IP Index. Entitled “The Roots of
Innovation,”
the Index scored the IP systems of 45 countries, representing over 90 percent
of the world’s gross domestic product (GDP). Scores were derived from several
specific factors pertinent to IP rights protections, allowing policymakers to
better understand where their countries stand in comparison to their peers.

The International
IP Index should prompt U.S. policymakers to strengthen our IP rights system. Although
the U.S. ranked high in the Index, the Index nonetheless identified IP rights enforcement
as one of the areas in which improvements need to be made. Lackluster Index scores
for IP rights systems in certain foreign countries should also spur U.S. trade
negotiators to seek stronger protections for Americans’ IP rights overseas. By
bolstering IP protections, the U.S. will further benefit from the correlations
between strong IP rights and overall economic innovation and investment.

Scores
in the Index were based on six key categories, including: patent rights,
copyrights, trademarks, trade secrets and market access, and enforcement, as
well as membership and ratification of international treaties. Those categories
encompassed numerous indicators of a strong IP system, including: industrial
designs term of protection, availability of legal measures to obtain redress for
unauthorized use of industrial design rights, regulatory and administrative
barriers to the commercialization of IP assets, and transparency and public
reporting by customs authorities of trade-related IP infringement.

Because
scoring for this year’s Index was based on 35 indicators, instead of 30, a
weighted-score was calculated (by Michael Horney) to determine whether
countries’ protections of IP rights were stronger or weaker than what was
calculated in last year’s Index. Of the 38 countries included in the last
Index, twenty improved their weighted-scores in this year’s Index.

For
the fifth consecutive year, the United States had the highest score. The U.S.
IP system rated 32.62 (out of 35). The United Kingdom and Germany followed with
scores of 32.39 and 31.92, respectively. The countries with the lowest scores
were India, Pakistan, and Venezuela at 8.75, 8.37, and 6.88, respectively.

However,
the United States’ weighted-score, which takes into account five new indicators,
actually decreased compared to the prior Index. The U.S. fell to 10th place in
patent protections after previously being tied for first. A reason for this
drop is that the patent opposition system in the U.S. adds substantial costs
and uncertainty to the economy. The U.S. also needs to improve its enforcement efforts
to combat counterfeit and pirated goods. Certainly, Congress can help step up
enforcement by reforming and
updating the Digital Millennium Copyright Act’s “notice and takedown system”
under Section 512.
Modernizing the U.S. Copyright Office and giving it authority for addressing
Section 512 matters as well as small claims for infringement – as provided in the
Goodlatte/Conyers proposal – would also bolster IP protections.

Moreover,
the relative lack of IP rights protections in several other countries, as
reflected in the Index, reinforces the need for U.S. pursuit of treaties or
agreements to better secure protections for American IP rights holders
internationally. In January, President Trump withdrew the U.S. from the
Trans-Pacific Partnership (TPP) agreement, which the Index regarded as pro-IP. But
there is no reason to think that TPP provisions regarding IP rights prompted
the withdrawal. Rather, the U.S. should seek new bi-lateral or multi-lateral
agreements, including ones more narrowly focused on strengthening protections
for American IP rights holders in foreign countries. And as more countries
adopt strong protections for IP rights through trade agreements, the global
economy will grow substantially. Mutual gains from international trade are much
higher when more nations adopt and enforce laws that protect IP rights.

Indeed,
the Index emphasized how “IP provides the living and growing roots that
stimulate innovation and bolster growth,” since economies with “the strongest
IP systems stand to reap the greatest economic rewards.” Across all countries,
the Index found several noteworthy correlations between strong IP protections and
economic innovation and creativity:

Resources dedicated to innovation: Economies that
provide a robust IP environment are more likely to embrace policies that create
a complete innovation “ecosystem” by investing in other key building blocks,
such as human capital and technological infrastructure.

R&D and creative activities: Economies that
exhibit a steady buzz of innovation and creativity are, with few exceptions,
those that have established strong IP environments – both generally and for
specific high-tech sectors. The opposite is also true: on the whole, those
economies with relatively weaker IP environments do not tend to experience the
levels of R&D and release of new content that economies with more secure
and stable IP environments do.

Access to technologies and creative content: A strong relationship exists between IP protections and greater access to end
products and services that make novel technologies and content available to
consumers.

A dynamic economy: IP is strongly
related to measures of foreign direct investment, business and industrial
growth, jobs, and GDP, ultimately providing the basis for reinvestment of
resources as the virtuous cycle begins anew.

The
Index concluded that strong protections of IP rights incentivize investment in
R&D, innovation, and creative content because they ensure entrepreneurs have
opportunity to earn a return on their labors. And as economies with strong IP
rights regimes grow and prosper, new goods and services are brought to market,
making consumers the ultimate beneficiaries.

The International IP Index provides U.S. policymakers
a useful tool for assessing how to improve our nation’s IP systems and enhance
innovation and creativity in the 21st Century economy.